Bitcoin's Kimchi Premium Surges to Three-Year High Amid Global Price Drop

The Bitcoin Kimchi Premium, a measure of the price gap between Bitcoin (BTC) in South Korea and the rest of the world, has surged to a three-year high of 11.9%. This spike suggests a robust domestic demand for the asset, even as global prices decline. Despite BTC's price dropping to $93,900, South Korean traders are paying a significant markup.

The high U.S. Dollar Index has added downward pressure on BTC's global price, amid a massive sell-off in Asian markets due to Trump's tariff measures. CryptoQuant CEO Ki Young Ju believes the surge in BTC's Kimchi Premium is not due to Korean traders buying the dip, but rather BTC being converted to USD instead of Korean Won. This indicates that relatively few Koreans are cashing out BTC for their fiat, and similar patterns may be playing out in other markets.

On Feb. 1, Donald Trump imposed tariffs on imports from Mexico, Canada, and China, leading to a slump in Asian markets. Hong Kong's Hang Seng index dropped 2.07%, while other Asian indices, including Japan's Nikkei 225, tumbled over 2.27%. The KOSPI index of South Korea fell 2.87%, and Taiwan's weighted index dropped 3.74%. The Indian stock futures also declined due to the tariff impact.

Analysts like Daniel Yan attribute the large sell-off in Asian markets to low liquidity and concerns about global economic instability. Protectionism policies, such as tariffs and quotas, have historically exacerbated economic downturns, as seen during the Great Depression. The crypto market also experienced a significant crash, with over $2 billion in liquidations on exchanges.

Despite the market slump, analysts remain optimistic about the potential recovery of both stock and crypto markets. Ansem believes that the markets will revive if Trump's diplomatic discussions on tariffs with Canada and Mexico do not go "horribly wrong." Smart Money Asia suggests that BTC and tech stocks remain a powerful hedge against inflation in the Asia market, but investors should practice caution as the BTC bull market matures.